The Hospitality Lawg would like to thank Pam Nieto and Matt Hoyt for helping out with this post. 

To the delight of the hospitality industry, the Department of Labor published on September 28 a formal notice in the Federal Register announcing its decision to postpone the effective date of its new "Wage Methodology for the Temporary non-Agricultural Employment H-2B Program" until November 30, 2011, from the current effective date of September 30, 2011 (i.e., TODAY).

Why the delay?  Funny you should ask . . .

The new Wage Rule, significantly revising the methodology for calculating the prevailing wages to be paid to H-2B foreign seasonal workers, as well as to U.S. workers recruited in connection with the H-2B workers, was published by DOL on January 19, 2011. The new methodology would have the effect of causing dramatic increases in wages. In recognition of the commitments that employers had made in reliance on the current methodology and to provide employers sufficient time to plan for their labor needs, as well as to minimize the disruption to their operations, DOL delayed implementation of the final rule so that the new prevailing wage methodology would only apply to wages paid for work performed on or after January 1, 2012.

Thereafter, on June 15, 2011, the U.S. District Court for the Eastern District of Pennsylvania, in Comité de Apoyo a Los Trabajadores Agrícolas (CATA), et al., v. Hilda Solis, et al., Civil Action No. 09-240, vacated the January 2012 effective date and ordered DOL to announce a new effective date within 45 days.  After publishing a Notice of Proposed Rulemaking (NPRM) on June 28, 2011 and reviewing comments to the NPRM, DOL published a final rule on August 1, 2011, amending the effective date of the new Wage Rule to all work performed on or after September 30, 2011.

Greatly concerned about the harsh and potentially devastating impact the rule would have on businesses and jobs, on September 7, 2011, the American Hotel & Lodging Association, the Louisiana Forestry Association, Inc., and others filed suit against DOL in the United States District Court for the Western District of Louisiana, Alexandria Division.  The associations argued that the Wage Rule, and the subsequent rule amending the Wage Rule’s original effective date, violate the Takings Clause of the Fifth Amendment to the United States Constitution, the Administrative Procedure Act, the Regulatory Flexibility Act, and the Immigration and Nationality Act.   A similar suit was then filed by another group of trade associations and employers on September 21, 2011, in the United States District Court for the Northern District of Florida, Pensacola Division.

Decision Applauded

In Wednesday’s federal register notice, DOL explains that it is delaying the effective date to November 30, 2011, because of the two pending lawsuits, as well as the possibility that the CATA lawsuit may be transferred to another court. DOL also commented that the delay will allow “time to mount an appropriate defense of the rule,” “for the orderly resolution of the various claims pending in two Federal courts” (including determining the appropriate venue), and for DOL “to avoid the possibility of administering the H-2B program under potentially conflicting court orders.”

Dr. Winslow Sargeant, Chief Counsel for Advocacy for the U.S. Small Business Administration, who has been working with small businesses to address the new Wage Rule, applauded DOL’s decision to delay implementation of the rule and also noted that:

[t]he potential wage increases under the current H-2B structure would price many small businesses out of the marketplace.